A Case Study: Supply Chain Management of BYD Company Ltd.

Table of Contents

Abstract

BYD, initially a battery manufacturer, has evolved into a leading player in the new energy vehicle (NEV) sector. The supply chain management of BYD Company Ltd is characterized by rapid battery and motor innovation and a strong backward integration model, achieving over 50% self-sufficiency in parts. This strategy has significantly reduced production costs from approximately 257,500 in 2021 to 159,000 in 2023. BYD utilizes smart supply chain practices, including AI and big data, to enhance logistics and demand forecasting. Sustainability efforts are integrated through green procurement and circular development strategies. As BYD expands internationally, it faces challenges in cross-border logistics and regulatory frameworks. Despite its strengths in cost control and supply security, issues such as slow delivery times and fragmented data systems remain. Additionally, the company must navigate ethical and regulatory risks associated with global sourcing, contrasting with Tesla’s software-driven competitiveness and distributed manufacturing strategy.

Keywords: Supply Chain Management of BYD Company Ltd

Introduction

BYD Auto Co., Ltd., a subsidiary of BYD Company, manufactures battery electric vehicles and plug-in hybrids, with brands like Denza and Yangwang. Established in 2003, it has seen significant growth in NEV sales, expanded internationally, and ceased production of internal combustion vehicles in 2022, focusing on vertical integration and battery production.Here is a detailed case-study of Supply Chain Management of BYD Company Ltd, structured for your interests as a supply-chain manager and social science graduate: background, strategic practices, strengths, challenges, and lessons for others.

Company Background in Supply Chain Context

BYD, originally a battery-maker, entered the automotive business in the early 2000s and has grown into a major producer of new energy vehicles (NEVs) in China and globally.Its supply chain context is heavily shaped by the NEV industry: rapid innovation of batteries, motors, material sourcing of lithium, nickel, etc., global logistics, and regulatory/policy pressures.The industry environment: under China’s “Made in China 2025” push, the NEV sector is encouraged to pursue vertical integration, digitisation, and global expansion. BYD is a prime example.

Here are key strategic features of BYD’s supply chain:

Vertical Integration

BYD has adopted a strong backward integration model: battery production, key components, and vehicle assembly are largely in-house or tightly controlled upstream. For instance, one study shows that BYD’s self-sufficiency rate for parts in the NEV supply chain exceeds 50%.This integration allows more direct control of cost, quality, and timing.Through vertical integration, BYD reduced unit production cost significantly from ~257,500 in 2021 to ~159,000 in 2023.

Digitisation and Smart Supply Chain

BYD has pushed to adopt smart supply chain practices: big data analytics, AI for logistics, digital twin simulations, connected manufacturing and supply chain flows.For example, studies show that leveraging AI and digital twins helps BYD improve demand forecasting, logistics route planning, and risk monitoring. Industry 4.0 era influenced BYD and supply chain visibility, cost control, sustainability becoming key topics.

Sustainability & Green Procurement

Supply Chain Management of BYD Company Ltd integrates environmental and social responsibility into its supply chain. For example, BYD has a “green procurement” and “circular development” strategy: selecting environmentally friendly materials, optimizing logistic transport, using circular packaging & packaging reuse. The company also established a risk-management committee to assess supply chain risks including sustainability risks.

Globalisation of Supply Chain

As BYD expands globally with factories abroad, and global sales, its supply chain becomes international. One study of BYD’s globalisation strategy emphasises how BYD integrates overseas production, supply networks and market logistics.This means BYD must manage cross-border logistics, tariffs/trade policy, international supplier networks, local sourcing in regional hubs.

Key Strengths in BYD’s Supply Chain

Cost control and competitiveness, i.e.,vertical integration + strong component production help BYD reduce unit cost and gain margin advantage.Supply security is having many upstream components in-house or tightly controlled helps reduce dependence on external suppliers, which matters when supply disruptions hit. The adoption of AI, digital supply chain modelling, logistics optimisation helps improve forecasting, reduce lead times, reduce logistics cost. Sustainability orientation meant Green procurement, circular logistics, environmental risk management enhance brand/protection and align with policy pressures.

Key Challenges & Risks of BYD Supply Chain

Lead time / delivery issues are there Given hybrid model many orders exist but delivery is slow — average lead time ~3.5 months, whereas competitors e.g., Tesla may be 1-5 weeks. That delay erodes customer trust. Data/IT systems are fragmented , While digitisation is pursued, BYD still faces challenges in having unified data standards, system interoperability across supply chain networks. Supplier collaboration & openness are the firm’s historically vertically integrated model reduces reliance on external partners, but as it moves to more open supply chain models, collaboration, transparency and supplier network strength need improving. Global expansion risks are as BYD moves overseas, challenges include international sourcing, legal/regulatory risks, logistics risks, political/trade risks. For example, BYD lacked a fully suitable supply chain for U.S. production because its upstream network was China-centric. Ethical and human rights risks are there,as external reporting of human rights, labour and sourcing risks linked to global component sourcing—these pose reputational and supply chain stability risks.

An assessment between BYD and Tesla

BYD, its component self-sufficiency and massive China volumes give it the edge in cost and unit scale, especially in price-sensitive markets. On the other hand, Tesla’s software/data, cell innovation and a globally distributed manufacturing strategy create enduring competitive moats in product differentiation and premium margins, provided it manages material/geopolitical risks.Both play complementary roles in the EV value chain: BYD shows how manufacturing + vertical integration wins volume and price competition; Tesla shows how software + strategic vertical moves create differentiation and long-term margin.

Conclusion

Supply Chain Management of BYD Company Ltd also operates its own shipping services to export its cars. On 9 January 2024, BYD’s first roll-on/roll-off cargo ship, named “BYD Explorer No.1”, was delivered and left the construction base in Longkou, Shandong province. The 200 m (660 ft)-long ship arrived at Yantai Port on the same day, before heading to Shenzhen for loading cars for exporting to Europe. According to China International Marine Containers (CIMC), the ship was built by Yantai CIMC Raffles Shipyard for the international ship management company Zodiac Maritime, and was leased to BYD as the first of its “sea shipping fleet”, with a loading capacity of 7,000 vehicles.